Investors interested in Automotive - Foreign stocks are likely familiar with Subaru Corporation (FUJHY) and Toyota Motor Corporation (TM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Subaru Corporation and Toyota Motor Corporation are both sporting a Zacks Rank of # 1 (Strong Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
FUJHY currently has a forward P/E ratio of 7.71, while TM has a forward P/E of 10.30. We also note that FUJHY has a PEG ratio of 0.33. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TM currently has a PEG ratio of 0.61.
Another notable valuation metric for FUJHY is its P/B ratio of 0.93. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TM has a P/B of 1.10.
Based on these metrics and many more, FUJHY holds a Value grade of A, while TM has a Value grade of C.
Both FUJHY and TM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FUJHY is the superior value option right now.
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